Federal Job Guarantee

Further, the FJG will have a strong macroeconomic stabilization effect. During economic downturns, it would expand and hire more people; it would then shrink during economic boom periods as people move from public to better-paying private employment. Pavlina R. Tcherneva, a leading voice on the FJG’s macroeconomic effects, argues that policies like the UBI have no counter-cyclical features. Thus, when the economy takes a downturn — say as it did in 2007 — basic incomes provide no automatic stabilizers to right the sinking ship.

This is good for the economy as a whole. Rather than expanding the unemployment insurance rolls during economic busts, the FJG would put folks to work and moderate the business cycle. Federal workers’ paychecks will increase demand, which will increase economic growth. Many economists agree that today’s secular stagnation — insufficient demand — is contributing to continued “lackluster” growth after the Great Recession. Only modest upticks in growth for the foreseeable future will come if we continue the status quo.